The Chancellor George Osborne delivered his final Autumn Statement of this Parliament amid ongoing economic uncertainty. The key indicators paint an unclear picture.
The UK economy is now expected to grow faster in 2014 than any other developed economy including the Eurozone. But the pace of GDP growth slowed between the second and the third quarters of this year, from 0.9% to 0.7%.
Inflation crept up slightly to 1.3% in October 2014 but this was from a 5-year low of 1.2% in September. Employment continues to rise and unemployment continues to fall but pay growth is only just keeping pace with inflation.
There were 76,000 more new businesses launched in 2013 than in 2012, and the number of businesses that failed last year fell by 6% on the year before. But annual growth in business investment is almost 3.5% lower than expected for 2014.
Despite the uncertain economic backdrop, the official update from the Office for Budget Responsibility (OBR) was positive. GDP growth in 2014 is expected to be 0.3% higher than the prediction made at the 2014 Budget in March. The OBR expects 500,000 new jobs to have been created by the end of the year, almost double the amount forecast in March. And the deficit has fallen to 5% of GDP, half the figure in 2010.
The Chancellor urged caution in view of “warning lights” flashing over the global economy but said the figures showed the long term economic plan is working and that the UK is “on course to prosperity.”
The following report summarises the announcements made by Chancellor George Osborne during the 2014 Autumn Statement on Wednesday 3 December 2014.
At a glance
A list of the key announcements from the Chancellor George Osborne’s Autumn Statement speech.
Small business rate relief will be doubled for another year.
The inflation-linked increases to business rates will be capped at 2%.
There will be a review of the structure of business rates.
The business rates discount for certain high street shops will increase by 50% to £1,500.
Research and development
Research and development tax credit will increase to 230% for small and medium sized businesses and 11% for large firms.
The British Business Bank will be expanded.
The Funding for Lending Scheme will be extended by a year until January 2016.
Businesses will not have to pay national insurance contributions when they hire apprentices who are under 25, up to the upper earnings limit.
National insurance contributions for employing anyone under 21 will be abolished from April 2015.
Diverted profit tax
Profits generated by multinational companies in the UK which are then moved offshore will be taxed at 25%.
The amount of profits that banks can offset against losses carried forward from the financial crisis will be limited to 50%.
The personal tax allowance will increase to £10,600 a year from April 2015. The higher rate threshold will rise from £41,865 this year to £42,385 next year.
The annual ISA allowance will increase to £15,240 a year from April 2015.
ISA savings that are inherited by a surviving spouse from a deceased partner will retain their tax-free status.
The 55% tax on unused inherited pension pots will be scrapped.
People who die before they are 75 will be able to pass on joint life or guaranteed term annuities tax free.
Residential property stamp duty
The way stamp duty is applied to residential properties will change to a marginal rate system. From midnight on 3 December 2014, rates will only apply to the proportion of the property price that falls within each band. The rate will be 0% on the first £125,000, rising to 12% on prices above £1.5 million.
Charges for non-domiciles resident in the UK for 12 of the last 14 years will increase to £60,000. A new £90,000 charge will be introduced for non-domiciles resident in the UK for 17 of the last 20 years.
Aid workers who die in service will be exempt from inheritance tax.
The Northern Ireland Executive will be able to control corporation tax within this parliament if it can prove that it can cope with the financial implications.
The Welsh Government will get full powers over the business rates regime.
Draft clauses will be released in the new year for devolution of income tax powers to Scotland.
The NHS will get an extra £2 billion a year until 2020. There will also be £1.2 billion of investment in GP services across the country.
A continued crackdown on tax avoidance and evasion will raise at least £5 billion in the next parliament.
Masters students will be able to get government-backed student loans of up to £10,000 to fund their studies.
Air passenger duty
Air passenger duty will be abolished for under 12s from May 2015 and for under 16s from March 2016.
Hospice charities, search and rescue services, and air ambulances will benefit from VAT refunds.
Carers will be included in the employment allowance which reduces employer national insurance contributions by up to £2,000.
The freeze on fuel duty will continue.
For a full summary document or further details on any of specific the matters raised please contact Vicki Harper